S6344-2011 Actions

• Jan 30, 2012: REFERRED TO TRANSPORTATION

S6344-2011 Memo

BILL NUMBER:S6344

TITLE OF BILL:
An act to amend the navigation law, in relation to claims against insur-
ers for petroleum spills

PURPOSE:
Protects homeowners from the onerous costs related to the remediation of
petroleum  discharges  on  residential  property.    Unless  the insurer
prevails on the affirmative defense, the standard homeowner's  insurance
policy should cover the claim.

SUMMARY OF PROVISIONS:
Section 1 amends section 190 of the Navigation Law to add the following:

(a)  requires all homeowners' policies of insurance to cover the cleanup
and removal costs and all direct and  indirect  damages  relating  to  a
discharge of petroleum;

(b)  establishes  an affirmative defense against a claim for coverage of
the costs and damages relating  to  a  discharge  of  petroleum  if  the
insured  had  actual  knowledge of a condition which a reasonable person
would have understood to pose an imminent risk of a discharge of  petro-
leum and that the insured failed to take reasonable steps to prevent the
discharge;

(c)  requires  insurers  to  provide notice in every homeowner's policy,
newly issued or renewed which insures against damage  to  property  that
states  in  part  "You have a responsibility to prevent a discharge from
your petroleum tanks and associated pipelines"; and

(d) establishes that nothing in this section shall be construed to limit
any pre-existing right in which the insured may  have  had  compensation
from  the insurer for cleanup and removal costs and all direct and indi-
rect damages relating to the discharge of petroleum.

Section 2 provides for an effective date of the first  of  January  next
succeeding the date on which it shall have become a law.

BACKGROUND AND JUSTIFICATION:
A  petroleum  discharge or spill is a serious threat to the environment.
Spills that occur on  residential  properties  can  cost  anywhere  from
several  thousand  dollars  to hundreds of thousands of dollars to clean
up. Many of these spills involve petroleum storage systems  whose  tanks
or  lines  have  leaked  allowing  oil  to seep into the soil and impact
groundwater which is a typical source of drinking  water.    Remediation
may  include  soil excavation, tank removal and replacement (if the tank
was the source), and groundwater monitoring or treatment. The  homeowner
is  strictly liable for the discharge or spill and the subsequent clean-
up  costs.  Insurance  companies  have   routinely   included   absolute
"pollution  exclusions" in all homeowner policies and denied coverage of

these costs. This legislation requires these  costs  to  be  covered  in
homeowner  policies.  These cases, though they often constitute a severe
financial burden to individual homeowners and are a threat to the  envi-
ronment  are  limited and should not impose a burden on insurance compa-
nies.

Therefore, the Comptroller urges passage of this legislation.

LEGISLATIVE HISTORY:
2009-2010 - S.5818 and A.8562

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
This act shall take effect on the first of January next  succeeding  the
date on which it shall have become a law.

S6344-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         6344
 I N  SENATE
 January 30, 2012
 
 Introduced  by Sen. GRISANTI -- (at request of the State Comptroller) -
 read twice and ordered printed, and when printed to  be  committed  to
 the Committee on Transportation
 

AN ACT to amend the navigation law, in relation to claims against insur
 ers for petroleum spills
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1.

Section 190 of the navigation law, as added by chapter  845
 of the laws of 1977, is amended to read as follows:

 

S 190. Claims against insurers. 1. Any claims for costs of cleanup and
 removal,  civil  penalties  or  damages  by  the state and any claim for
 damages by any injured person, may be brought directly against the bond,
 the insurer, or any other person providing evidence of financial respon
 sibility.
 2. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, ALL  HOMEOWN
 ERS'  POLICIES  OF  INSURANCE  IN  THIS STATE WHICH SHALL INSURE AGAINST
 DAMAGE TO PROPERTY SHALL CLEARLY PROVIDE THAT CLEANUP AND REMOVAL  COSTS
 AND ALL DIRECT AND INDIRECT DAMAGES RELATING TO A DISCHARGE OF PETROLEUM
 SHALL CONSTITUTE PROPERTY DAMAGE AND SHALL BE INSURABLE WITHIN THE MEAN
 ING OF THE GENERAL LIABILITY PORTIONS OF SUCH INSURANCE POLICY. THE RISK
 OF DAMAGES CAUSED BY SUCH DISCHARGES MAY NOT BE AN EXCLUSION IN ANY SUCH
 POLICY ISSUED IN THE STATE.
 3.  IN  ANY  CLAIM FOR COVERAGE OF THE COSTS AND DAMAGES RELATING TO A
 DISCHARGE OF PETROLEUM, THE INSURER MAY RAISE  THE  AFFIRMATIVE  DEFENSE
 THAT  THE INSURED HAD ACTUAL KNOWLEDGE OF A CONDITION WHICH A REASONABLE
 PERSON WOULD HAVE UNDERSTOOD TO POSE AN IMMINENT RISK OF A DISCHARGE  OF
 PETROLEUM  AND  THAT  THE  INSURED  FAILED  TO  TAKE REASONABLE STEPS TO
 PREVENT THE DISCHARGE.
 4. INSURERS SHALL PROVIDE THE FOLLOWING NOTICE IN BOLD LETTERING OF AT
 LEAST TWELVE POINT TYPE FONT IN EVERY HOMEOWNER'S POLICY,  NEWLY  ISSUED
 OR RENEWED WHICH INSURES AGAINST DAMAGE TO PROPERTY:

 YOU  HAVE  A RESPONSIBILITY TO PREVENT A DISCHARGE FROM YOUR PETROLEUM
 (OIL, KEROSENE, ETC.) TANKS AND ASSOCIATED PIPELINES. IF YOU KNOW  OF  A
 CONDITION  WHICH  COULD  RESULT  IN  A  DISCHARGE,  YOUR FAILURE TO TAKE
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD11121-01-1
 
       S. 6344                             2
 REASONABLE STEPS TO  PREVENT  THE  DISCHARGE  COULD  VOID  THE  COVERAGE
 PROVIDED BY THIS POLICY.
 5.  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO LIMIT ANY PRE-EXIST
 ING RIGHT, WHETHER ACTUAL OR IMPLIED, IN WHICH THE INSURED MAY HAVE  HAD
 COMPENSATION  FROM  THE  INSURER  FOR  CLEANUP AND REMOVAL COSTS AND ALL
 DIRECT AND INDIRECT DAMAGES RELATING TO A DISCHARGE OF PETROLEUM.
 

S 2. This act shall take effect on the first of January next  succeed
 ing the date on which it shall have become a law.

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